Leading German Economist to Visit ESRI

04/09/2009

Leading German Economist to Visit ESRI

On September 3, 2008, Professor Klaus F. Zimmermann will visit the ESRI to launch a new book titled EU Labor Markets after Post-Enlargement Migration. Professor Zimmermann is co-editor and contributor to the book. Among the other contributors is Dr. Alan Barrett of the ESRI who has written a chapter on the impact of EU Enlargement on the Irish economy.   Five Years after EU Enlargement: Positive Effects for the Economy, Ireland among the Winners The Eastern Enlargement of the European Union has not hurt the receiving labour markets, creates some risks but also opportunities in the sending countries, and benefits the EU as a whole. Transitional arrangements work against the countries that impose them. In the current economic crisis, labour migration will play an important role in cushioning the effects of the crisis and creating a potential for recovery. These are the main results of a new book “EU Labor Markets after Post-Enlargement Migration” edited by Martin Kahanec and Klaus F. Zimmermann from the Institute for the Study of Labor (IZA Bonn, Germany) containing detailed studies by an international team of renowned experts in the field of labour migration, among them Alan Barrett (ESRI, Dublin). The authors propose free migration as a solution for labour shortages and strained social security systems in the old EU member states but also as a precondition for brain circulation be! nefiting the new EU member states. Member of the press are invited to a press briefing at 3pm on Thursday 3 September at the offices of the ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2. At this briefing details of the book will be discussed. In addition, Professor Zimmermann will take questions on current developments in the German economy. He will give a public seminar at 4pm., on the subject of the book. The main findings of the new book are:

• Free migration is a solution rather than a foe for labour market woes and cash-strapped social security systems in the EU.
• The positive effects of EU eastern enlargement on the EU as a whole in terms of GDP, GDP per capita, productivity, and employment clearly dominate, thus strengthening EU's global competitiveness. Post-enlargement immigration from the EU8 will increase the GDP (and GDP per capita) of the enlarged EU by about 0.1 % in the short run and about 0.2% in the long run.
• There is no evidence whatsoever that the post-enlargement labour migrants on aggregate displace native workers, lower their wages, or that they would be more dependent on welfare. Immigration put some pressure on wage growth, however, thereby reducing inflationary pressures and improving receiving countries' competitiveness.
• Countries applying transitional measures (e.g. Germany) are the losers of EU eastern enlargement, as the best and brightest migrants choose other destinations. Ireland, the United Kingdom, Sweden, and other countries that have allowed free mobility at an early stage, have benefited the most.
• While brain drain is a concern in the source countries, the anticipated brain circulation between EU member states (and the return of migrants with new skills gained abroad) will in fact help to solve their demographic and economic problems.
• The current financial economic crisis is unlikely to drive large flows of the post-enlargement migrants back home, as their homelands are hit similarly or even harder than their hosts. In fact, post-enlargement migrants are young, relatively skilled, and temporary, all indicating that they may help to cushion the adverse effects of the crisis by appropriately reallocating between regions and sectors.
• The chapter in the book on Ireland, authored by Alan Barrett of the ESRI, includes the following findings.
• The number of people from the EU's New Member States living in Ireland grew from just over 10,000 in 2002 to over 200,000 in 2008.
• One of the main features of the immigrants was their high employment rate. In 2008, 80% of these immigrants aged over 15 were employed. The corresponding figure for Irish people was 59%. While some of the difference could be explained by the age structure of the two groups, the high employment rate among the New Member State immigrants points to a strong work-orientation on their part.
• Research on the labour market outcomes for immigrants from the New Member States showed them experiencing disadvantages relative to native workers in terms of wages and occupational attainment. For example, a study conducted using data from 2005 showed the immigrants earning over 30% less than natives workers with the same levels of education and workplace experience.
• The inflow of workers from the EU's New Member States raised both GNP and GNP per head, according to simulations conducted by ESRI researchers. Immigration helped to dampen wage pressures in the Irish economy in the years after Enlargement. As a loss in competitiveness was one of the problems which developed in the economy in recent years, it can be said that immigration acted to at least contain this problem.
• Note for editors: Klaus F. Zimmermann has been Full Professor of Economics at Bonn University and Director of the Institute for the Study of Labor (IZA Bonn) since 1998. He is also President of the German Institute for Economic Research (DIW Berlin, since 2000), Honorary Professor of Economics at the Free University of Berlin (since 2001), and Honorary Professor at the Renmin University of Peking (since December 2006). He is also Chairman of the Society of the German Economic Research Institutes (ARGE) (since 2005), advisor to the President of the EU Commission (2001-2003 and since 2005), economic advisor to the Prime Minister of North Rhine-Westphalia (since 2008), and member of the World Economic Forum's Global Agenda Council on Migration.